CEYLON CEMENT CORPORATION v. FERNANDO

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Ceylon Cement Corporation v. Fernando
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CEYLON CEMENT CORPORATION
v.FERNANDO
COURT OF APPEALWIJETUNGA, J.
C.A. No. 765/82 – LT. No. 1/17637/79.
FEBRUARY 2. 1990.
Industrial Dispute – Industrial Disputes Act,ss.31B.3lC-Employment on probation – Rightot employer to terminate employment during probationary period.
The employer is the sole judge to decide whether the services of a probationer aresatisfactory or not. A probationer has no right to be confirmed in the post and the employeris not bound to show good cause where he terminates the services of a probationer at theend of the term of probation or even before the expiry of that period. The Tribunal cannotsit in judgment over the decision of the employer. It can examine the grounds fortermination only for the purpose of finding out whemar the employer had acted mala fideor with ulterior motives or was actuated by motives of victimisation. There is no law whichrequires that an employee should be forewarned in writing so that he may adjust himselfto the requirements of the service. The very word "probation" implies that he is on trial.
When s. 3f B (4) provides that "any relief or redress may be granted by a labour tribunalto a workman upon an application made under subsection (1) notwithstanding anything tothe contrary in any contract of service between him and his employer", it means that a• Labour Tribunal is unfeterred by considerations based on contractual rights between theemployer and employee unlike the ordinary courts of law which have to adhere to the termsof the contract. The manner in which a probationary clause in a contract of employmentshould be considered is governed by a different principle which enable the employer toassess the employee's aptitudes, abilities and characteristics and the amount of interesthe shows from which suitability for permanent employment can be gauged.
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Cases referred to :
Moosajee Ltd. v. Rasiah CALR 1986 Voi 1 p 95.
Richard Petris & Co. Ltd. v. Jayatunga. Sriskantha's Law Reports Vol l.p 17
S.W.R.D. Bandaranaike National Memorial Foundation v. M.P.C. Perera. C A. Nos.694/80 <S 696/80 LTNo. 13/7764/80. C.A. Minutes ol 27.06.1988.
14) Venkatacharya v. Mysore Sugar Co. Ltd. A.I.R. 1954 Mysore 175.
Shell Company ol Ceylon Ltd. v. Pathirana 64 NLR 71.
Giovanola Binny Ltd. v. Industrial Tribunal (1969) Labour and Industrial Cases (India)1473 at 1475.
Ceylon Trading Co. Ltd. v. United Tea. Rubber and Local Produce Workers' Union.1986 Vol. 2 CALR p. 62.
APPEAL from Order of Labour Tribunal.
N.K. M. Perera with Miss L. Abeysekera for employer-appellant.
A. J. I. Tillakawardene with R. Gunapala for Applicant-Respondent.
Cur. adv. vult.
June 11, 1990
WIJETUNGA, J.
The applicant – respondent was employed as Deputy Works Manager ofthe appellant Corporation with effect from 1.12.1978. The appointmentwas subject to a period of 3 years’ probalion. His services were termi-nated with immediate effect on 3.4.1979 by a V.H.F. communication. Hemade an application to the Labour T ribunal claiming inter alia compensa-tion/compensation in lieu of reinstatement.
The appellant Corporation filed answer stating that the applicant'swork was found to be unsatisfactory and that his conduct was adverselyaffecting the discipline of the Corporation and admitted having terminatedthe applicant's services as aforesaid, but claimed that it was in law entitledto do so at any time during the applicant’s probationary period. Theanswer further stated that the applicant had found similar employmentsoon after his services were thus terminated. It was the appellantCprporation's position that the termination of the applicant’s services was
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not only lawful but also justified and that the applicant was not entitled tothe reliefs he had prayed for.
After inquiry, the learned President of the Labour Tribunal, by his orderdated 11.10.1982, held that the services of the applicant had beenterminated without good caus.e and ordered the payment of compensationto the applicant in a sum of Rs. 18,000/-. The present appeal is from thatorder.
It is common ground that the applicant was on probation at the time hisservices were terminated.
The only oral evidence before the Tribunal was that of the Chairmanof the appellant Corporation. The applicant did not give evidence. Thelearned President has held that the termination of the contract ofemployment without the applicant being forewarned of his shortcomingswas unjust and that good cause has not been shown to justify suchtermination.
It was the contention of learned counsel for the employer-appellantthat it was well within the rights of an employer to terminate the servicesof a probationer if he considered his services to be unsatisfactory, duringor at the end of the period of probation, so long as he acted bona fide. Hesubmitted that the sufficiency of cause for the termination was a matterforthe employer. He was not obliged to adduce reasons forthe terminationof the probationer's services nor was it necessary that the probationershould be forewarned prior to his services being terminated, provided theemployer did not act mala fide. The reasons for such termination, as totheir sufficiency or otherwise, cannot, he submitted, be questioned beforea Labour Tribunal. In the instant case,ma/a tides on the part of theemployer was never alleged, nor in issue. He further contended that thePresident had erred in law when he held that the applicant should becompensated for loss of employment. In any event, the Tribunal hadgiven no indication whatsoever as to the basis cf computation of suchcompensation. Learned Counsel cited a number of authorities in support,to which I will advert later.
Learned Counsel for the applicant-respondent, on the other hand,submitted that the main ground of appeal that the applicant was notentitled to any relief as he was on probation at the time of the termination
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of his services was not consistent with the statutory provisions containedin the Industrial Disputes Act. He contended that a probationary clausecontained in a letter of appointment does not preclude the LabourTribunal from granting relief in the same manner as it would grant reliefto any other employee. The definition of ‘workman” contained in section4B of the Act drew no distinction between a probationer and any otherworkman. Further, the Labour Tribunal was under a duty to make all suchinquiries into an application and to hear all such evidence as it mayconsider necessary and make a just and equitable order, notwithstandinganything to the contrary in any contract of service between the workmanand his employer. He submitted that the Tribunal was not restricted to therights and obligations that the parties had created between themselvesaccording to law and that the terms or the conditions of the letter otappointment relating to probation do not in any way prevent the LabourTribunal from granting relief. There was no statutory provision whichprevented the Labour Tribunal from examining the decision ot theemployer to terminate the services of a probationer. Nor does aprobationary clause in the letter of appointment oust the jurisdiction andpower of the T ribunal to grant relief, even if the clause may have anythingto the contrary.
Counsel further submitted that the authorities relied on by the employer-appellant have not considered the statutory provisions contained in theIndustrial Disputes Act, in particular in sections 31 B (1), 31 B (4), 31 C(1) and 48. I shall now refer to those decisions.
In Moosajee Ltd., v. Rasiah (1) i t was held that a probationer has noright to be conlirmed in his post and that the employer is not bound to giveany reason as to why he does not confirm the probationer. The period ofprobation is a period of trial during which the probationer's capacity,conduct or character is tested before he is admitted to regular employment.Forthe purpose of confirmation, the employee must perform his servicesto the satisfaction of his employer.
The employer is the sole judge to decide whether the services of aprobationer are satisfactory or not. A probationer has no right to beconfirmed in the post and the employer is not bound to show good causewhere he terminates the services of a probationer at the end of the termof probation or even before the expiry of that period. The Tribunal cannotsit in judgment over the decision of the employer. It can examine the
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grounds for termination only for the purpose of finding out whether theemployer had acted mala fide or with ulterior motives or was actuated bymotives of victimisation. There is no law which requires that an employeeshould be forewarned in writing so that he may adjust himself to therequirements of his service.
In Richard Peiris & Co. Ltd., v. Jayatunga, (2) it was held that a periodof probation necessarily entails that the probationer should satisfy theemployer before the employer decides to affirm him in his employmentwhich would place the employer under various legal restraints and
obligations and, thereforeany employer should have the
right to discontinue a probationer if he does not come up to the expecta-tions of the employer. There is no requirement under the law that anemployee should be forewarned orally or in writing so that he may adjusthimself to the requirements of his service.The very word ‘probation’implies that he is on trial.
In S. W. R. D. Bartdaranaike National Memorial Foundation v. M.P.C.Perera, (3) following Moosajee Ltd., v. Rasiah (supra), it was held thatit is now a well settled law that the services of a probationer can beterminated if his services are not considered satisfactory, that theprinciple has been well established that the employer is the sole judge todecide whether the services of a probationer are satisfactory or not andthat the employer is not bound to show good cause where he terminatesthe services of a probationer at the end of the term of probation or evenbefore the expiry of that period.
In that case, the court further stated that it is also a well settled principlethat the Labour Tribunal in these circumstances cannot sit in judgmentover the decision of the employer and that it can examine the grounds fortermination only for the purpose of finding out whether the employer hasacted mala fide in doing so.
Learned counsel for the applicant-respondent submitted that the dictain the cases referred to above have been taken from the judgment ofVenkatacharya v. Mysore Sugar Co. Ltd., (4) but the facts of that caseare different from those that had been considered by our Courts and thatno consideration has been given by our Courts to the provisions of section31 C of the Industrial Disputes Act under which the Tribunal can lessenthe effect of the rigour of the law whereas in that case the judgment couldonly declare the rights under the contract. It was also submitted that the
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Indian decision concerned itself with a fixed term contract and not a periodof employment of which a part was subject to probation.
Venkatacharya's case was a plaintiff’s appeal against the dismissal ofa suit for damages claimed on the ground of wrongful termination ofservice. The defendant denied liability to pay any amount and contendedthat the appointment of the plaintiff was not regular, that even otherwiseits termination could not be questioned. The learned subordinate Judgeon a consideration of the evidence adduced in the case held that theappointment of the plaintiff was quite valid and legal, that there was nogood reason for the termination of the service but it afforded no cause ofaction for the suit as the employment was at the will of the defendant. Hetherefore dismissed the suit with costs.
In the appeal, the arguments on either side were confined to the natureand extent of the rights which an employee has when he is appointed onprobation. The appellate Court dismissed the appeal with costs holdingthat the claim was rightly disallowed by the lower Court.
In the course of that judgment, it was stated as follows :—
"Obviously a probationer is not in the same position as others inservice. His is a state of suspense attended with the uncertainty of aninchoate arrangement. Prima facie his rights and claims against theemployer are less than those of others. "Probation" cannot be taken tobind the parties to be employer and employee till it is over and conferon the employee rights not available to others. That would be contraryto the accepted notions of service as ‘Probation’ is understood to bea stage preparatory and prior to confirmation. It is not disputed that theservices of a person on probation can be dispensed with on groundson which a person appointed without it can be dismissed. While the twoto that extent are on a par, it is more reasonable to imply a disability ordisadvantage for a “probationer" than a privilege as against one whois not on probation. The period denotes the time up to which he will beon trial and not an assured duration of service."
It is correct that this judgment was only declaring the rights of partiesunder the contract and that the Court was not empowered to grant reliefor redress contrary to the terms thereof, whereas specific provision hasbeen made in section 31B(4) enabling a Labour Tribunal to grant suchrelief, notwithstanding anything to the contrary in any contract of service.It is also true that the facts of no two cases would be identical. But, in my
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view, the status of a probationer as expounded in that judgment is equallyapplicable to a probationer who seeks relief underthe Industrial DisputesAct. While there is no difference in the attributes of status, it is in regardto the question of relief that the Labour Tribunal is unfettered by the termsof the contract. Therefore, our Courts were well entitled to adopt the dictaof that case in relation to the status of a probationer.
Undoubtedly, the Industrial Disputes Act has conferred wide powerson Labour Tribunals in granting relief to persons whose services havebeen terminated. It has been held in Shell Company of Ceylon Ltd. v.Pathirana (5) that “there is no limit imposed by the legislature in regardto the powerto grant relief under section 31B that would prevent the grantof relief where the termination of service is both lawful and justified. Theonly limit placed on the power to grant relief under the said section 31Bis that contained in sub-section (1) of section 31C of the IndustrialDisputes Act. That sub-section requires the order granting relief to be justand equitable. The power to grant relief under section 31B is wide in viewof the fact that sub-section (4) of that section enabjes relief to be grantednotwithstanding anything to the contrary in any contract of servicebetween the applicant and his employer”.
But, as stated by Nigel Hatch in his commentary on the IndustrialDisputes Act of Sri Lanka at page 277, “Wide as the power of LabourCourts are, they are not unlimited and their discretion must be exercisedreasonably giving due weightage to the interest of the employee, employerand the publicthe latter where relevant".
When section 31B(4) provides that "any relief or redress may begranted by a labour tribunal to a workman upon an application madeunder sub-section (1) notwithstanding anything to the contrary in anycontract of service between him and his employer", it means that a LabourTribunal is unfettered by considerations based on contractual rightsbetween the employer and the employee, unlike the ordinary courts of lawwhich have to adhere to the terms of the contract. Labour Tribunals cou Id,therefore, grant relief even contrary to the terms of the contract, but onegolden thread runs through the entire fabric of the duties and powers ofa Labour Tribunal in regard to applications for relief or redress, viz. thatthe Labour Tribunal should make such order as may appear to theTribunal to be just and equitable. In determining what is just andequitable, the Courts have through numerous decisions laid downprinciples for the guidance of such tribunals.
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The manner in which a probationary clause in a contract of employmentshould be considered is another such principle which has evolved overthe years through the various dicta of the superior Courts, which dicta inmy view do not rnn counterto the provisions of the Industrial Disputes Act.
The term 'probation’ has been defined as “a fixed and limited period oftime for which an organization employs a new employee in order toassess his aptitudes, abilities and characteristics and the amount ofinterest he shows in this job so as to enable employer and employee aliketo make a final decision on whether he is suitable and whether there is anymutual interest in his permanent employment." Arye Cloberson “Durationand Extension of Probationary Employment-A Re-Examination" in (1969)Vol. II,. The Journal of Industrial Relations (Australia) 54 at 56, (quotedby S. R. de Silva in his Legal Frame work of Industrial Relations in Ceylonat page 480). Various other definitions have appeared in treatises as wellas decisions of the Courts.
It is of the very essence of the concept of probation that such a personis on trial regarding his°suitability for regular employment and is liable tobe discharged on being found to be unsuitable for permanent absorption-vide Giovanola Binny Ltd. v. Industrial Tribunal (6).
The next question that arises is, who should decide whether theservices of such a probationer have been satisfactory or not. It has beenconsistently held that in the absence of mala fides, it is none other thanthe employer.
In Ceylon Trading Co. Ltd. v. United Tea, Rubber and Local ProduceWorkers' Union (7) this Court reiterated the general principle that ‘theemployer must remain the sole judge of whether his conduct and workwere satisfactory during the period on probation and if he decides it is notso, it would be inequitable and unfair, in the absence of malice, to foist theview of the Tribunal on that of the Management which has to contend withmanagement of labour, maintenance of discipline in the labour force andother allied questions’.
This, however does not mean that an employer can demand that hisdecision to terminate the services of a probationer cannot be examinedby the Labour Tribunal. But, our Courts have laid down the principle thatrelief would be granted to a probationer in respect of the termination of hisservices only if the employer had acted mala fide. Thus, the grounds of
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termination will be examined solely for the limited purpose of ascertainingwhether the element of mala tides exists. This approach leaves theemployer free to satisfy himself as to the suitability of a probationer, solong as he acts bona fide. To hold otherwise would make serious inroads1into the management’s discretion of selection of suitable employees andwould not be conducive to the efficient working of institutions and theirgood management.
Applying these principles to the instant case, it is patently clear that theLabour Tribunal had misdirected itself in regard to the manner andcircumstances in which a probationer's services could be terminated andcompensation awarded.
The learned President was in grave error when, contrary to thenumerous authorities cited above, he held that forewarnings werenecessary before the termination of services of the applicant, who wasadmittedly a probationer and that the employer should have shown goodcause for such termination.
As was mentioned earlier, mala fides on the part of the employer wasnever in issue. The President himself makes no mention of mala fides inhis order. Nor was there any material placed before the Tribunal touchingon mala fides. The award of compensation, therefore, does not arise.
For the reasons aforesaid, I would set aside the order of the Presidentawarding compensation to the applicant.
In all circumstances of this case, I make no order as regards costs.Appeal allowed.
Order set aside.